Reinsurance sector seen to reap windfall from ‘BBB’

THIS year’s Philippine Insurers and Reinsurers Association (Pira) chairman believes the reinsurance industry would reap a windfall from the revenue-generating effects of the government’s “Build, Build, Build” (BBB) infrastructure program.

“With the government’s massive infrastructure program rolled out and with household consumer spending poised to grow further, demand for both nonlife- and life-insurance products is expected to remain buoyant,” Allan R. Santos said. “Growth prospects for our local reinsurance industry in particular remain bright

on the back of the continued rise of the Philippine economy.”

Santos may, however, have to keep his fingers crossed as government data revealed a lower growth rate in the third quarter of last year. Philippine Statistics Authority data bared that the country’s gross domestic product for the third quarter of 2018 was 6.1 percent, lower than the revised second quarter GDP figure of 6.2 percent.

This means the effects of the Duterte administration’s BBB, which consists of 75 flagship infrastructure projects, has yet to usher in the country’s “golden age of infrastructure.” The government is seen to spend around P8 trillion to fund these projects.

Santos, who was elected as Pira chairman for this year, said he remains “cautiously optimistic.”

“I remain cautiously optimistic about the sustained growth of the Philippine reinsurance industry as growth of the insurance industry in emerging markets continues to outpace that of the developed markets,” added Santos, who is also president and CEO of the National Reinsurance Corp. of the Philippines.

Based on a report by Swiss Reinsurance Co. Ltd. (Swiss Re) published in November 2018, its outlook for the growth of the global insurance industry for 2019 and 2020 remain positive as economic momentum is seen to support global annual insurance premium growth of around 3 percent.

It added that the main drivers for the growth in global premiums in 2019 and 2020 would be coming from emerging markets for both the nonlife- and life-insurance industry.

The Insurance Commission reported last year that the industry posted an 18-percent growth in terms of premium income as of endSeptember, with the life, nonlife and mutual benefit associations posting a strong performance during the nine-month period.

The insurance industry recorded a total premium income of P218.91 billion, which is 18-percent higher than the P185.51 billion recorded in the same period for 2017.